New Graduates Will Face Sluggish Job Market Amid Uncertainty, Survey Finds

November 15, 2012

The job market for new graduates at all degree levels is projected to grow by about 3 percent in 2012-13, a small increase and not unlike last year's figure. But while the numbers look similar, employers' confidence—and their ability to form hiring plans—has dropped in the face of political uncertainty, according to a major survey of employers released on Thursday.

The survey, to which 4,300 employers responded, was conducted before the election and captured uncertainty about both its outcome and whether Congress would be able to avoid the spending cuts and tax increases of the fast-approaching fiscal cliff. At the same time, the global economy remains weak and unpredictable.

"There are two layers of uncertainty that added together," said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University, which released the report.

As a result, only 22 percent of full-time hiring representatives who responded to the survey were sure of their hiring plans, compared with 42 percent last year. Those employers may well be recruiting as they would any other year. They just don't know whether they will hire new graduates, or how many they might take.

Still, the job market for new graduates is slowly coming back, according to a report on the survey, "Recruiting Trends 2012-2013," that the Michigan State center plans to post later on Thursday. "While the number of opportunities may be insufficient to provide every new graduate a meaningful position," it says, "the expansion continues to whittle away at the number having to enter part-time or non-career-related employment."

'Coming Out of a Hole'

Hiring for new bachelor's-degree recipients is expected to increase by 5 percent, according to the report. Hiring for new associate-degree recipients is expected to grow by more than 30 percent. Part of the growth in the associate-degree market could be the result of employers' "buying down" for positions they would normally seek a bachelor's-degree holder to fill, Mr. Gardner said.

But, he added, the bigger story is that employers—those in the automobile industry, for example—are expecting workers to come in with more training. What everyone has been saying for years has finally come true, Mr. Gardner said: A high-school degree is no longer enough to secure a better-paying entry-level job.

It makes perfect sense that the hiring of associate-degree graduates would grow at a faster rate than that of bachelor's-degree graduates, because jobs requiring an associate degree contracted significantly in the recession, said Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce. "When you're coming out of a hole," he said, "everything looks like up."

But after several years of growth, the market for new M.B.A.'s is expected to shrink by 6 percent—especially troubling news since a large number of them are expected to graduate this year. And there is some indication that, to save money, employers are hiring bachelor's-degree recipients for positions that in the past would have been filled with M.B.A.'s, according to the report.

Hiring of new bachelor's-degree earners varies by major, the survey found, although about a third of employers said they would consider applicants regardless of major. The majors most asked for by employers included accounting, marketing, finance, and computer science.

Recruiting in High School

The projected average starting salary for new bachelor's-degree graduates is $37,000. For a new associate-degree graduate, the number is only a bit lower, at $35,500. New graduates, however, have unrealistic salary expectations, according to employers.

"The most troubling aspect of this year's report is the consistent and damning rhetoric from employers that students' sense of entitlement, expectations, and level of preparedness is totally out of sync with the reality of the workplace," writes Mr. Gardner in the report's conclusion. For many of this year's graduating seniors, the economy has been weak the entire time they have been in college, he points out. But that does not appear to have made them more realistic about their own chances in the job market.

Employers were also asked about their recruitment techniques. On-campus interviews have dropped off steadily since 2005, the report says, and only 37 precent of employers expect to conduct them this year. Employers still want to meet students face-to-face, the report says, but they increasingly want to do so before senior year. One way of doing that is by sending current employees to host information sessions at their alma maters, as half of survey respondents do.

"Many employers are trying to get their brand out at an earlier stage," said Katharine S. Brooks, director of liberal-arts career services at the University of Texas at Austin. One way they do that is through internships, she said, and another is social media. In particular, she sees many employers looking for students on Linked In—though encouraging students to use the site can be an uphill battle.

In the future, Mr. Gardner said he expects to see employers connecting with students even earlier—when they are still in high school. He can envision companies' keeping an eye on students at the high schools that feed into their target colleges, and connecting with them even before they arrive on the campus.